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Moving out of your parent’s house is a big step in life. It symbolizes your adulthood, independence, and financial stability, to name a few. But even though you’ve moved out, you still probably rely on your parents for: access to free laundry, home cooked meals, and your car insurance policy.  

Most parents let their children remain on their insurance plans until they are 26, even if they no longer live in the same household.

Did you know that once you move out, your parent’s car insurance policy may no longer cover you? Indeed, allowing you to remain on their car insurance is a testament of how much they love you, however, if you no longer live in their household, you could cause potential (and expensive) problems for you parents if a car-related injury were were to happen.

Why is it a bad idea to stay on your parent’s car insurance plan?

Under most personal auto policies, the definition of an “insured” includes “family members.” While you are a family member by any other definition, in the world of insurance “family members” are limited to “a person related to you by blood, marriage or adoption who lives in the same household.”  Keywords: same household.

So, now that you’ve moved out and are living on your own, you no longer meet the “family member” status, which means you may not be covered under your parent’s auto insurance policy. You may be a “permissive user” on their insurance, but you may encounter more limitations than coverage through their insurance.

Here are 3 instances in which being on your parent’s insurance will cause problems:

  1. Let’s say you borrow your new roommates truck to run a quick errand and accidentally rear end another vehicle and cause minor injuries to the other driver. You won’t be covered for liability coverage for the other driver’s injuries or for the property damage to the other vehicle.
  1. It’s summer and you and a few friends have decided to rent a vehicle to for a weekend getaway. You decided not to buy rental insurance from the rental car company — you won’t be covered for any property damage if there is an accident because your parent’s insurance no longer covers you.
  1. If you get into a car accident and your passengers don’t have insurance, you won’t have any medical coverage for their injuries from the car accident. Who is left to pay?

It’s time for your own auto insurance

Without coverage from your own auto insurance policy, you will have to pay for any accident-related expenses out of your own pocket. Can you really afford that? It’s better to purchase your own policy and pay a small amount each month to protect you from any unexpected auto accident expenses, than to risk huge expenses in the event of an accident.